25
institutions that affect different workers in different sectors
liste di mobilità
will remain in place until 2017. The most significant reform effort - from the political
standpoint - has been an attempt to modify the employment protection of currently employed workers. Under the current legislation, employees in firms with more than
15 employees are entitled to reinstatement in the case of unfair dismissal, through the
so called “Article 18” of the Labour Code
Statuto dei Lavoratori
.
3.3. The Debated Articolo 18
In the Italian labour law the protection against unfair dismissal is based on Article 18 of the Italian Labour Code
Statuto dei Lavoratori
. According to this piece of legislation, a worker that is dismissed unfairly is entitled to a full reinstatement into
the workplace. Inevitably, the ultimate decision in terms of fairness versus unfairness of a specific dismissal rests with a court trial and a judge ruling. Until June 2012,
once a judge ruled the dismissal unfair, the worker had the right of being reinstated. Alternatively, the worker had the option of being compensated with 15 months of
salary, in addition to any foregone salary from the time of the dismissal to the time of the sentence. Since June 2012, through the so called
Fornero reform
, under specific circumstances such a choice is given to the judge. In other words, the judge can now
avoid a full reinstatement and opt for a monetary compensation that can be as large as 27 months of salary. It is certainly too soon to provide any serious evidence of
whether such marginal change in the legislation provided any substantial change in the functioning of the Italian labour market.
At a more general level, it has proved very difficult to provide hard econometric evidence of the effect of Article 18 on the labour market. The cases that actually end
up in court are a very limited proportion of the total firm initiated separation. Indeed, most separation goes through a bargaining between the firm and the worker mediated
by the union that is typically resolved with a monetary compensation and an agreement to avoid a court ruling. Nevertheless, in the general perception the court
ruling is typically perceived as very long, very costly, and somewhat random. While it is difficult to find proper evidence on these procedural costs, one possibility is to
look into the cross country difference in court behaviour. Ichino et al. 2012 recently looked closely into the trials for
unfair dismissal
in three large cities Milano, Roma and Torino in the years 2003-2005. They closely inspected more than 3500 trials in
Rome, 6500 in Milano and 1736 in Torino. They report two main findings. First, the average length of the cases is always larger than 6 months. Second, there is huge
cross-city heterogeneity in the length of trials, from approximately 7 months in Torino to more than 15 in Rome. The difference is indeed remarkable and suggests
that the existing protection -as perceived by the general public- really involves elements of randomness and uncertainty.
Indirect econometric evidence of the effect of Article 18 is based on the fact that its provision applies only to firms and establishments with more than 15 employees.
Such threshold effects have been studied by Garibaldi et al 2004 and Schivardi and Torrini 2008. They find that the effects of Article18 are statistically significant on
the job separation but quantitatively small. Overall, the evidence suggests that passing the threshold reduces the mobility of firms by some 2 percent. The size distribution of
firms -similarly- does not provide any particular discontinuity between 15 and 16 employees. One of the reasons why Article 18 does not appear so important around
the size threshold is correlated to the fact that firms - around the employment threshold- may use more intensively other form of labour contracts, more flexible
ones, or even hire in the black market in order to avoid crossing the threshold without being subject to the provision of Article 18.
26
Although the right to reinstatement is a hotly debated issue in Italy and very much central to the platform of the social partners, its impact remains unclear in a
labour market where less than 50 per cent of the employees work in companies with more than 15 employees Figure 25 and the percentage of self-employed is more
than one order of magnitude larger than in France and Germany Figure 26a. Most noticeably, workers hired under the
contratto a progetto
introduced in 2003 by the
legge Biagi
as the most flexible, “atypical”, labour contract, are categorized as self- employed even in cases when they have had only one employer for few subsequent
years.
Figure 25 Share of employment by firm size
5 10
15 20
25 30
35 40
45 50
1 9
9 2
1 9
9 3
1 9
9 4
1 9
9 5
1 9
9 6
1 9
9 7
1 9
9 8
1 9
9 9
2 2
1 2
2 2
3 2
4 2
5 2
6 2
7 2
8 2
9 2
1 2
1 1
P e
rc e
n ta
g e
o f
E m
p lo
y e
d
Share of Employment, by Firm Size
Firms with up to 10 employees Firms with 10-20 employees
Firms with more than 20 employees
Data source: EU LFS 1983-2011
